March 1, 1999

Dear Colleagues:

I am pleased to provide you with the Ways and Means Committee New York State Economic Report for 1998 & 1999. This report is part of our commitment to presenting clear and accurate information to the public. It offers a complete and detailed assessment of the national and State economies, including an analysis of the areas of economic strength and weakness among the State's regional economies.

The U.S. economy continues to exhibit tremendous strength in face of financial turmoil in the world economy. National economic growth, as measured by real Gross Domestic Product (GDP), was a robust 3.9 percent for 1998. The nation also continued to enjoy both low inflation and low unemployment. The Committee staff predicts that national economic growth will slow but only moderately, to a still strong 3.3 percent for 1999.

New York State has experienced stronger employment growth as a result of the continuing national expansion, as well as spectacular Wall Street performances over the last four years. However, the State continues to lag the nation in employment creation. Additionally, within the State, there are wide disparities in job creation. Western New York is experiencing anemic job growth. Manhattan and Suffolk have solid job growth while the downstate areas of Brooklyn and the Bronx are faced with little or no job growth. The Committee staff is predicting a rate of employment growth of 1.6 percent for New York State in 1999. Hence, the State's rate of job creation will continue to lag the nation's employment growth of 2.0 percent. State wages and salaries will grow 5.9 percent in 1999, following growth of 7.5 percent in 1998.

The Committee staff projections are reviewed by an independent panel of professional economists, drawn from major financial and manufacturing corporations, prestigious universities, and private forecasters from across the State. Assembly Speaker Sheldon Silver and I would like to express our appreciation to all of the members of our Board of Economic Advisors. Their dedication and expert judgement have been invaluable in helping the Ways and Means Committee staff refine and improve this forecast. They have served to make the work of the staff the best in the State. Of course, they are not responsible for either the numbers or the views expressed in this document.

I wish to acknowledge the fine work done by the talented Ways and Means Committee staff. Their forecasts are integral to the budget process. The Speaker and I look forward to working with each of you to achieve a budget fair for all New Yorkers.

Sincerely,

Herman D. Farrell, Jr.
Chairman